Micro-business turnover tax on qualifying annual turnover up to R1 million.
Turnover tax
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27% of turnover, indicative
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Effective rate
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A simpler tax for very small businesses
Turnover tax exists because the normal tax system is heavy for a one-person trading business or a tiny company. Instead of keeping a full set of accounts, working out a profit, and then dealing with income tax, provisional tax, capital gains tax, and dividends tax separately, a qualifying micro business elects turnover tax and pays a single tax based on what flows through the till. This calculator models that election. You feed in your annual turnover, and it applies the SARS turnover-tax scale to give one tax figure, then puts an indicative company-tax number alongside it for context.
The catch is the eligibility ceiling. Turnover tax is only open to a business with qualifying annual turnover of R1 million or less, which is the limit this tool enforces. Type a figure above R1 million and the calculator stops returning a turnover-tax amount, because the regime simply is not available there and you would fall back to normal income tax. There are other gates too: certain professional service businesses and companies with disqualifying shareholdings cannot use turnover tax, so passing the rand test is necessary but not always sufficient.
How the sliding scale is built
The scale is progressive, which surprises people who expect a flat percentage. The first slice of turnover is taxed at nothing, and each higher band carries a slightly higher rate on the turnover that falls inside it. The bands this calculator applies are zero on the first R335,000, then 1 percent on turnover from R335,001 to R500,000, 2 percent from R500,001 to R750,000, and 3 percent from R750,001 up to the R1 million ceiling. Those exact figures are the calculator's working assumption rather than a number I can certify, so check the current turnover-tax table on the SARS, the South African Revenue Service, website before you file. The structure of a tax-free floor followed by rising bands is the stable part you can rely on.
Running R600,000 of turnover through the scale
Take a small online retailer turning over R600,000 a year. Nothing is charged on the first R335,000. The slice from R335,000 to R500,000, which is R165,000, attracts 1 percent, giving R1,650. The slice from R500,000 to R600,000, which is R100,000, attracts 2 percent, giving R2,000. Add those and the turnover tax is R3,650, an effective rate of about 0.61 percent of turnover. The calculator also shows R162,000 as a rough 27 percent figure, but treat that purely as a ceiling for orientation, because real company tax is charged on profit, not turnover, so a profitable company's actual bill would be far lower than R162,000.
| Turnover slice | Rate | Tax |
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Where turnover tax helps and where it hurts
The regime rewards thin record-keeping and high margins. If your costs are low and most of your turnover becomes profit, a charge of a fraction of a percent on turnover can beat the normal system handily. The danger is the mirror image: turnover tax ignores your costs entirely, so a high-revenue, low-margin business, think a reseller buying stock at 90 cents and selling at a rand, can pay turnover tax even in a year it barely breaks even. A common mistake is electing turnover tax in a good year and then being locked into it through a lean one, because you generally cannot hop in and out freely. To pressure-test the decision against the profit-based regimes, run the same business through the turnover tax versus normal tax tool before you commit.
Does turnover tax replace VAT as well?
No. Turnover tax replaces income tax, provisional tax, CGT, and dividends tax, but it does not switch off VAT. A registered micro business can still choose to register for VAT, although many stay below the R1 million compulsory VAT threshold and skip it. Keep the two questions separate when you plan.
What turnover actually counts toward the R1 million test?
Broadly it is the receipts from your trade, not your profit, and certain capital receipts are excluded or only partly counted. Investment income and once-off asset sales are treated under their own rules. Because the definition has edges, confirm what to include with SARS or a tax practitioner before deciding you are under the line.